Written by: Peter Jones, Chief Economist, 17 Oct 2012

Building activity figures released today by the Australian Bureau of Statistics fell again in the June quarter, confirming the industry’s prolonged decline.

The value of work done in constant price terms fell across all key metrics. New residential building fell 3.1 per cent, alterations and additions to residential building fell 3.6 per cent and non-residential building fell 3 per cent, seasonally adjusted. In annual terms, the decline in building work done fell 5.1 per cent.

Master Builders Australia Chief Economist, Peter Jones said the figures confirm previous evidence of poor industry conditions.

“Master Builder’s own survey of more than 500 builders and contractors has found builders’ own business conditions are now weaker than during the global financial crisis.

“Today’s building activity statistics measure the value of building work done and confirm what builders have been reporting in previous Master Builders Australia surveys – profits, sales, display centre traffic, enquiries and work on the books all remain dangerously low.

“Increasingly, builders and contractors are tendering for projects with little to no margin, which is not sustainable for either the contractor or the client.

“The Reserve Bank has cut official interest rates and while Monday’s housing finance figures show some positive indications, the industry had hoped for an earlier and sharper uplift.

“Consideration should be given to other policy instruments to target the current and forecast soft conditions in the building and construction industry. The Government should not slavishly pursue a budget surplus in the face of a flagging economy,” Mr Jones said.